By Giulia Petroni

The global push for artificial intelligence is poised to fuel a sharp rise in electricity demand, with consumption from data centers expected to more than double by the end of the decade, according to the International Energy Agency.

By 2030, data centers will require slightly more energy than Japan consumes today, with demand for AI-optimized facilities alone set to quadruple, the Paris-based agency predicts.

"The rise of AI has huge implications for energy," the IEA said Thursday in its latest report. An AI-focused data center typically consumes as much electricity as 100,000 households, but some of the largest ones currently under construction will consume 20 times more as much.

The U.S. is set to capture the largest share of this projected surge, with data centers accounting for nearly half of its electricity demand growth through 2030. By the end of the decade, the country is expected to consume more electricity for AI-driven data processing than for the production of aluminium, steel, cement and chemicals combined.

However, 50% of data centers under development in the U.S. are in pre-existing large clusters, potentially raising risks of local bottlenecks.

"AI-focused data centres can draw as much electricity as power-intensive factories such as aluminium smelters, but they are much more geographically concentrated," the IEA said. Today, nearly half of the U.S.'s data center capacity is located in five regional clusters.

In other advanced economies, data centers are projected to drive more than 20% of electricity demand growth between now and 2030. But globally, they will account for less than 10% of the increase in electricity consumption.

Last year, data centers consumed roughly 1.5% of the world's electricity--equating to around 415 terawatt-hours--with the U.S. accounting for the largest share, followed by China and Europe. Since 2017, global electricity usage by data centers has grown by around 12% annually, more than four times the rate of overall electricity consumption, the report found.

To meet rising demand, a diverse mix of energy sources will be tapped. Renewables and natural gas are expected to play a leading role, but emerging technologies such as small modular nuclear reactors and advanced geothermal could also contribute.

Data centers are also set to be one of the fastest-growing sources of emissions, with their electricity-related emissions expected to rise to 300 million tons by 2035 from 180 million tons today.

However, the IEA cautioned that concerns over AI accelerating climate change appear to be "overstated." The technology could drive significant efficiencies across the energy sector, helping to reduce grid outages, supporting innovations such as driverless cars, optimizing traffic systems and harnessing fossil fuels and critical mineral resources.

"The widespread adoption of existing AI applications could lead to emissions reductions that are far larger than emissions from data centers--but also far smaller than what is needed to address climate change," the IEA said.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

April 10, 2025 08:33 ET (12:33 GMT)

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